In a perfect world, nothing goes wrong. Ideally, when payments are received from a customer, they should be processed without any difficulty or complication. From time to time, however, unusual situations might arise.
When payments by cheque are received through the post, the accounts department should ensure that the cheque has been correctly prepared.
If a cheque has been incorrectly completed, it should be returned to the customer. N such circumstances, there is usually an office procedure to follow to deal appropriately with the situation.
A cheque that is more than six months out of date will not be processed by the bank. It would be unusual for any cheque to be more than just a few days old. However, there are occasions when a customer writes the wrong year on a cheque. This is often accidental, such as early in a new year. Sometimes, a customer may write in the wrong year deliberately, hoping to delay payment by completing the cheque incorrectly. Out-of-date cheques should be returned to the customer.
When a customer pays by credit card, the credit card company may refuse the payment because the customers credit card limit has been exceeded. When a customer tries to pay by card in a shop, the payment will be rejected immediately by the automated checking system.
However, when a customer pays by post, for example by completing an order form which includes credit card details, the payment will not be rejected until later. The credit card payment will be submitted to the bank, but will then be returned when the credit card company rejects it. On receiving notification of a rejected payment, the customer should be informed and asked to pay the amount due by a different method.
A supervisor should be informed of unusual situations with large payments because the customer could be deliberately delaying payment, or the attempt at payment may even be fraudulent-for example, a customer may try to pay with a stolen credit card.
Sometimes the amount of a payment may disagree with the supporting documentation. For example:
In situations where a credit customer is entitled to settlement discount in excess of what has already been accounted for, this will normally be resolved by issuing a credit note to the customer for the additional settlement discount they are entitled to.
Mistakes of this kind can be corrected by referring the problem back to the customer.
A general rule ought to be, however, that a business should bank the payments it receives, and deal with any issues or discrepancies later. For example, suppose that a business receives a payment of $950 in settlement of an invoice but, on checking, it is discovered that the invoice is for $960. The procedure should be to bank the payment for $950 immediately, and contact the customer to request the remaining $10.
Occasionally, you may be asked to check the money from a cash register against the recorded sales from the till roll. The amount of cash collected may be less than the total sales recorded by the cash register. If this happened, some money - possibly notes and coins - have gone missing. It is possible that it may have been stolen. The appropriate course of action may seem obvious:
Problems may also arise in relation to claims made by employees for reimbursement of expenses. Such problems could fall into one of three categories as considered below
Procedures should be in place to ensure that any claim falling under the above headings is referred to a higher-level signatory to review and decide upon whether it should be paid, than the decided upon by the usual signatory. This means that a more senior employee than the person who usually approves of the expenses is required to authorise them. They must treat each claim on a case-by-case basis. This means that they must look at the circumstances surrounding the breach of rules before deciding whether reimbursement should be made.
For example, the employee buying stationery without prior authorisation may have needed, for example, a printer cartridge in order to print documents to meet a deadline. The employee may have attempted to contact a more senior employee for authorisation and been unable to contact an appropriate person. It would be unfair if such reimbursement was to be denied. Alternatively, the employee may have purchased unnecessary items that were not required, in which case reimbursement should be denied.
1 Which form of payment allows a purchaser to immediately transfer money from their bank account to the sellers bank account?
A
Cheque payment
B
Charge card
C
Credit card
D
Debit card
2 Which form of automated payment would be useful in paying wages to employees?
A
BACS
B
Credit transfer
C
Direct debit
D
Standing order
3 In which of the following instances would a different form of payment be requested for the purchase of goods costing $40?
A
When a customer pays by cheque
B
When a customers credit card company states that the transaction would exceed the set credit limit
C
When a customer pays by $1 and $2 coins
D
When a customer is only able to pay by debit card
For a suggested answer, see the Answers section at the end of the book.